Court File and Parties

COURT FILE NOs: CV-17-584058 and CV-17-577371-00CP DATE: 20190322 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: JB & M Walker Ltd., Plaintiff – AND – The TDL Group Corp., Defendant

BEFORE: EM Morgan J.

COUNSEL: Richard Quance, Tom Arndt, and Emily Dubis, for the Plaintiffs Mark Gelowitz and Jennifer Dolman, for the Defendant

HEARD: March 21, 2019

CERTIFICATION MOTION

[1] The Plaintiff in both of these actions is a Tim Hortons franchisee and the Defendant is the Tim Hortons franchisor. Court File No. CV-17-577371 relates to a dispute over use of the Ad Fund for the franchise system, while Court File No. CV-17-584058 relates to the formation of a franchisee Association by franchise owners.

[2] The parties in each of the actions have reached a tentative settlement. The Plaintiff brings these motions for certification of each of the claims under the Class Proceedings Act, 1992, SO 1992, c. 6 (“CPA”), for the purposes of the settlement. On that basis, the Defendant consents to certification of the two claims.

[3] The CPA is remedial legislation and should be given a large and liberal interpretation to meet its primary objectives: a) access to justice; b) judicial economy; and c) behaviour modification for wrongdoers: Hollick v Toronto (City), 2001 SCC 68, [2001] 3 SCR 158, at paras 14-16. This is particularly the case where certification is sought in anticipation of a settlement. Strathy J. (as he then was) pointed this out in Osmun v Cadbury Adams Canada Inc., 2009 ONSC 72092, at para 21: “although the certification requirements are the same in a settlement context as in a litigation context, it is generally accepted that they need not be as rigorously applied in a settlement context.”

[4] Class counsel submits that all of the criteria for certification under section 5 of the CPA are met here, and counsel for the Defendant does not disagree. The language of section 5(1) of the CPA is mandatory, and states that, “The court shall certify a class proceeding on a motion if" the 5 certification requirements are met [emphasis added]. Under the circumstances, I concur with counsel that this is a proper case for certification.

[5] Turning briefly to the specific sub-parts or the certification test, section 5(1)(a) requires that the pleadings disclose a cause of action. The test for this requirement is low; in order to refuse certification on this requirement the court would have to find that the action cannot possibly succeed at trial. This low bar has been passed here. The current version of the claim is the result of a pleadings motion in which the causes of action were paired down to ones that have been held to be viable.

[6] Section 5(1)(b) requires that there be an identifiable class. The classes here are all persons that were Tim Hortons franchisees during the class period. The class period in the case concerning the Ad Fund commences on the date the Defendant was acquired by the South American-based private equity firm 3G Capital – December 15, 2014. The class period in the case concerning the franchisee Association commences on the date the Great White North Franchisee Association was incorporated – March 9, 2017. The classes consist of approximately 1,500 current franchisees having 3,800 stores, plus those individuals that were franchisees during the class period but are no longer franchisees. They are all readily identifiable business owners and entities.

[7] Section 5(1)(c) requires that there be common issues. The parties have now agreed on the common issues in both actions for the purposes of the settlement.

[8] The proposed Common Issues for the Ad Fund action are: a) whether the Defendant is a franchisor as defined by the Wishart Act? b) whether the Defendant breached the statutory duty of fair dealing in its use and administration of the Ad Fund? c) whether the Defendant breached the common law duty of good faith or Quebec Civil Code with its use and administration of the Ad Fund? d) whether the Ad Fund moneys were used or administered in breach of the Franchise Agreement prior to the Opt-Out Deadline?

[9] The proposed common issues for the Association action are: a) whether the Defendant is a franchisor as defined by the Wishart Act? b) whether the Defendant interfered with or breached the class members statutory right to associate or restricted, by contract or otherwise, any class member from forming or joining an association? c) whether the Defendant breached the common law or statutory duties of good faith and fair dealing in relation to the class members’ right to associate? d) whether the Defendant breached any terms of the Franchise Agreements as a result of any alleged interference with the class members’ right to associate?

[10] There is some basis in fact for each of the common issues. The Supreme Court of Canada has observed that, “The ‘some basis in fact’ standard does not require the court to resolve conflicting facts and evidence at the certification stage… The certification stage does not involve an assessment of the merits of the claim and is not intended to be a pronouncement on the viability or strength of the action; ‘rather, it focuses on the form of the action in order to determine whether the action can appropriately go forward as a class proceeding’”: Pro-Sys Consultants Ltd. v Microsoft Corporation, 2013 SCC 57, [2013] 3 SCR 477, at para 102, quoting Infineon Technologies AG v Option consommateurs, 2013 SCC 59, [2013] 3 SCR 600, at para 65.

[11] Section 5(1)(d) requires that a class proceeding be the preferable procedure for litigating the claim. A class proceeding is fair, efficient, manageable, and generally preferable to individual trials and other procedures: Rumley v British Columbia, 2001 SCC 69, [2001] 3 SCR 184, at para 35.

[12] The CPA's policy objectives of access to justice, judicial economy, and behaviour modification are fostered by certifying the common issues for the purposes of settlement rather than requiring individual trials for each class member. For the two actions in issue here, there is a “strong basis” for concluding that a class proceeding is the preferable procedure: Krajewski v Now Entertainment Group, Inc., 2012 ONSC 3908, at para 32; Coleman v Bayer Inc., [2004] OJ No 1974, at para 80; Paramount Pictures (Canada) Inc. v Dillon, [2006] OJ No 2368, at para 36.

[13] Section 5(1)(e) seeks to ensure that there is a representative Plaintiff that is adequate to the task, that has produced a litigation plan, and that has no conflict of interest. The representative Plaintiff in both actions is a current franchisee and is the President of the Great White North Franchisee Association, the association at issue in the Association Action. The Plaintiff has no conflict and has been involved with counsel in negotiating the proposed settlement and communicating its terms to class members. It has directed class counsel to publish the Settlement Agreement on a public access website.

[14] The parties produced a Notice Plan for both actions that sets out a workable method of administering and resolving the claims of the class notifying class members of the certification and settlement of the proceedings. The Notice Plan, which is attached as Schedule A to the Settlement Agreement, provides notice and protects the interest of class members, including current and former franchisees, pursuant to the requirements of section 17 the of the CPA.

[15] The content of the Notice Plan is three fold: i. The Defendant is to send First Notice to all current franchisees using its Intranet; ii. The Defendant is to provide last known address for all former franchisees and class counsel will then email/regular mail the First Notice to those addresses; and iii. Class counsel will also post the First Notice on a dedicated website.

[16] As set out in section 17(6) of the CPA, the First Notice contains a description of the actions, the key terms of the proposed settlement, an explanation of each class member’s right to opt out, a summary of the litigation funding agreement and the arrangement with respect to class counsel fees and disbursements, and an address for any inquiries that class members may have. It also directs class members to view the Settlement Agreement online.

[17] In all, the requirements for certifying a class action are met in both actions.

[18] There shall be an Order certifying each of the actions as class proceedings. Notice of this certification and the proposed settlement shall be effected as set out in the Settlement Agreement and Notice Plan.

Morgan J. Date: March 22, 2019