COURT FILE NO.: CV-17-586063-00CP
DATE: 20220610
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Marcy David, Brenda Brooks, and Andrew Balodis, Plaintiffs
– AND –
Loblaw Companies Limited, George Weston Limited, Weston Foods (Canada) Inc., Weston Bakeries Limited, Canada Bread Company, Limited, Grupo Bimbo, S.A.B. De C.V., Maple Leaf Foods Inc., Empire Company Limited, Sobeys Inc., Metro Inc., Wal-Mart Canada Corp., Wal-Mart Stores, Inc. and Giant Tiger Stores Limited, Defendants
BEFORE: E.M. Morgan J.
COUNSEL: Jim Orr, Jonathan Careen, Pujan Modi, and Justin Smith, for the Plaintiffs
Cathy Beagan Flood, Randall Hofley, and Natalie Cammarasana, for the Defendant Canada Bread Company
Andrew McCoomb, Ted Brook, and Eric C. Lefebvre, for the Defendant Metro Inc.
Marcus Kremer, Erin Penney, Rob Russel, and Josh Abaki, for the Defendants Loblaw Companies Limited, George Weston Limited, Weston Foods (Canada) Inc., Weston Bakeries Limited
Sinziana Hennig and Eliot Kolers, for the Defendants Empire Company Limited and Sobeys Inc.
Chantelle Cseh, for the Defendant Giant Tiger Stores Limited
Adam Hirsh, for the Defendant Maple Leaf Foods Inc.
Anita Banicevic, for the Defendants Walmart Canada Corp and Walmart Inc.
HEARD: June 9, 2022
CASE CONFERENCE – TERMS OF ORDER
[1] I have been provided with three different versions of a draft certification Order flowing from my reasons for decision dated December 31, 2021: David v. Loblaw, 2021 ONSC 7331. Plaintiffs’ counsel created an initial draft, counsel for the producer Defendants then edited and embellished on that with a redlined version of the draft, and counsel for the retail Defendants then further edited it and incorporated some but not all of the producers’ changes.
[2] I will work with the redlined draft produced by the producer Defendants and presented at the case conference by counsel for Canada Bread Company as this is the most comprehensive of the three draft Orders. It incorporates the Plaintiffs’ draft and contains the significant proposed edits to that draft. I have attached that draft hereto as Schedule ‘A’ for reference.
[3] I accept the draft found at Schedule ‘A’ in its entirety, with the following exceptions and comments:
• Paragraph 1(g) – the words “to consumers” are to be removed.
This phrase would limit the products at issue in a way that is not contemplated by my reasons for decision. As Plaintiffs’ counsel points out, packaged bread includes the listed products if sold by the Defendant retailers either to consumers or to other retailers; it is not limited to products sold directly to consumers. I specifically mentioned this at para. 77 of my certification decision.
• Paragraph 3 – the Schedule ‘A’ version of the class definition matches my reasons for decision.
Removal of the words “or entities” merely removes a redundancy. For these purposes, “persons” means juridical persons, which includes “entities”.
Removal of the final phrase “or manufactured by a Defendant producer” ensures that the class is defined by its purchase of products that were subject to the alleged price fixing conspiracy. The retail Defendants are alleged to be conspirators with the producer Defendants; the former are in the business of re-selling the price-fixed products while the latter sell through the retail Defendants. The case is pleaded as one conspiracy, not separate conspiracies by the producer and retail level of Defendants. Accordingly, any product that is the subject of the conspiracy must have passed through both levels of conspirators. A producer cannot conspire to fix prices on its own without its cooperating retailer.
Removal of the phrase “or its affiliates” mirrors the fact that affiliates were not mentioned in my reasons for decision. As discussed with counsel at the case conference, “affiliates” is an undefined word that was never mentioned in the Plaintiffs’ oral or written submissions in the certification motion, and consequently. Plaintiffs’ counsel submits that the reason they were not referred to in argument is that “everyone was aware” that the claim against the Defendants included their “affiliates”. That may be the case, but I was not let in on the secret. Since it was left out of the certification argument, I can only say that everyone was aware of it but me.
In any case, the word “affiliate” is not a legal term of art, and so its inclusion would likely inspire more questions than it answers; in fact, counsel have pointed out that while the term is used in the federal Competition Act, it has different definitions in different parts of that statute. If a given “affiliate” turns out to be a different trade name but the same legal entity as a Defendant, then it is already included in the definition. By contrast, if an “affiliate”’ turns out to be an entity unrelated to a Defendant but with whom a Defendant has an arm’s length business relationship, it is not included in the existing definition. Finally, if an “affiliate” turns out to be a separate legal entity that is wholly owned by a Defendant and essentially a Defendant’s alter ego, or even if an “affiliate” turns out to be a separate entity partly owned and/or controlled by a Defendant, there is an argument that it is already included in the existing definition. That argument can be addressed in a motion with relevant supporting materials somewhere down the line.
• Paragraphs 8(xiii) and (xiv) – The common issues questions dealing with constructive trust will remain in the list of common issues.
I understand that counsel for the Defendants are of the view that the common issue questions relating to constructive trust were proposed in reference to the unjust enrichment claims by umbrella purchasers, and that now that umbrella purchasers’ claims have not been certified the constructive trust questions are no longer relevant as common issues. I also understand that counsel for the Plaintiffs more or less concede that the umbrella purchasers’ claims were the initial reason for including these two common issues questions. At the same time, Plaintiffs’ counsel point out that constructive trust is a remedy, not a cause of action, and a judge hearing the common issues trial might still find it useful as a remedy in some context.
I take Plaintiffs’ counsel’s point. Having eliminated from certification the claims by umbrella purchasers, my inclusion of the two constructive trust questions may have been a result of my slightly over-enthusiastic reproduction of the Plaintiffs’ proposed list of common issues; nevertheless, it prejudices no one to leave these two questions to the common issues trial judge. The trial judge can consider constructive trust among the other potential remedies at the court’s disposal. If, as Plaintiffs’ counsel suggest, the remedy is useful in some way, the questions can be answered in the affirmative. On the other hand, if, as Defendants’ counsel suggest, the fact that losses claimed by umbrella purchasers no longer need be remedied means that both constructive trust questions can easily be answered in the negative, the trial judge will be free to do just that.
[4] I would ask counsel for Canada Bread to produce a clean version (i.e. with redlining removed) of the Order appended as Schedule ‘A’ that incorporates the changes noted above. This cleaned-up version should be shared with and approved in form and content by all counsel, and then forwarded to my assistant in Word format.
Morgan J.
Date: June 10, 2022
SCHEDULE ‘A’
Court File No. CV-17-586063-00CP
ONTARIO
SUPERIOR COURT OF JUSTICE
THE HONOURABLE ) FRIDAY, THE 31st DAY OF
JUSTICE EDWARD MORGAN ) DECEMBER 2021
B E T W E E N:
MARCY DAVID, and BRENDA BROOKS and ANDREW BALODIS
Plaintiffs
- and -
LOBLAW COMPANIES LIMITED, GEORGE WESTON LIMITED, WESTON FOODS (CANADA) INC., WESTON BAKERIES LIMITED, CANADA BREAD COMPANY, LIMITED, GRUPO BIMBO, S.A.B. DE C.V., MAPLE LEAF FOODS INC., EMPIRE COMPANY LIMITED,
SOBEYS INC., METRO INC., WAL-MART CANADA CORP., WAL-MART STORES, INC. and GIANT TIGER STORES LIMITED
Defendants
Proceeding under the Class Proceedings Act
PROCEEDING UNDER THE CLASS PROCEEDINGS ACT, 1992
ORDER
THIS MOTION made by the Plaintiffs for an Order certifying this action as a class proceeding under the Class Proceedings Act, 1992, S.O. 1992, c. 6 (“CPA”) was heard virtually on October 25-29, 2021.
ON READING the materials filed by the Plaintiffs and by the Defendants, and on hearing the submissions of the lawyers for the Plaintiffs and the Defendants,
- THIS COURT ORDERS AND DECLARES that for the purposes of this Order, the following definitions shall apply:
(a) “Certified Claims” means, collectively, the Plaintiffs’ claims under s. 45 of the Competition Act, RSC 1985, c. C-34, (the “Competition Act”) for the tort of civil conspiracy and for unjust enrichment, in respect of alleged overcharges on the sale of Packaged Bread;
(b) “Certified Defendants” means, collectively, Loblaw Companies Limited, George Weston Limited, Weston Foods (Canada) Inc., Weston Bakeries Limited, Canada Bread Company, Limited, Metro Inc., Sobeys Inc., Wal-Mart Canada Corp., and Giant Tiger Stores Limited;
(c) “Class Period” shall mean the period of time between November 1, 2001 and December 31, 2021;
(d) “Conspiracy” means the allegation that:
(i) (i) before 12 March 2010, the conspiracy, combination, agreement or arrangement between the Certified Defendants to prevent, limit or lessen unduly the manufacture or production of Packaged Bread; to enhance unreasonably the price thereof; to prevent or lessen unduly competition in the production, manufacture, purchase, sale, or supply of Packaged Bread; or otherwise to restrain or injure competition unduly between or among the Certified Defendants;
(ii) (ii) on and after 12 March 2010, the conspiracy agreement or arrangement between or among the Certified Defendants or some of them to fix, maintain, increase or control the price of Packaged Bread; to allocate sales, territories, customers or markets for the production or supply of Packaged Bread; to fix, maintain, control, prevent, lessen or eliminate the production or supply of Packaged Bread; and
(iii) (iii) at any time during the Class Period the conspiracy, agreement or arrangement among the Certified Defendants to act in contravention of s. 45(1) of the Competition Act with:
- the predominatepredominant purpose of causing harm to the Class
the actual or constructive intent and with the natural result of causing harm to the Class.
(e) “Excluded Persons” shall mean residents of Quebec and the Defendants and their subsidiaries, affiliates, officers, directors, senior employees, legal representatives, heirs, predecessors, successors and assigns;
(f) “Fresh Bread” shall mean bread products and bread alternatives that are partly or fully baked in retail stores or foodservice providers, or otherwise finished in retail stores or foodservice providers; and
(g) “Packaged Bread” shall mean industrially-produced bread products and bread alternatives, meaning manufactured and packaged by the Defendant producers, including only bagged bread, buns, rolls, bagels, naan bread, English muffins, wraps, pita and tortillas for resale to consumers. Packaged Bread does not include Fresh Bread.
THIS COURT ORDERS that this action be certified as a class proceeding pursuant to s. 5 of the CPA with respect to the Certified Claims as against the Certified Defendants.
THIS COURT ORDERS the class shall be defined as:
All persons or entities residing in Canada as of the date of the Order other than Excluded Persons, who during the Class Period purchased Packaged Bread, either directly or indirectly, that was sold by a Defendant retailer or its affiliates, or manufactured by a Defendant producer.
(collectively referred to as the “Class Members” or the “Class”).
THIS COURT ORDERS that the umbrella claims do not pass the threshold common issues test under section 5(1)(c) of the CPA, and shall not be certified.
THIS COURT ORDERS that the causes of action alleged against Walmart Inc. (formerly known as Wal-Mart Stores, Inc.), Empire Company Limited, Grupo Bimbo, S.A.B de C.V, and Maple Leaf Foods Inc. do not meet the requirements for certification set out in section 5(1)(a) of the CPA, and shall not be certified.
THIS COURT ORDERS that Marcy David, Brenda Brooks and Andrew Balodis are hereby appointed as the Representative Plaintiffs for the Class.
THIS COURT ORDERS that Strosberg Sasso Sutts LLP and Orr Taylor LLP are hereby appointed as lawyers for the Class (“Class Counsel”).
THIS COURT ORDERS that the common issues be and are hereby certified as follows:
BREACH OF THE COMPETITION ACT
i. Did the Certified Defendants, or any of them, engage in conduct that was contrary to section 45 of the Competition Act in effect during the Class Period up to and including 11 March 2010 in respect of the sale of Packaged Bread? If so, what was the duration of the conduct?
ii. Did the Certified Defendants, or any of them, engage in conduct that was contrary to section 45 of the Competition Act in effect during the Class Period from 12
March 2010 in respect of the sale of Packaged Bread? If so, what was the duration of the conduct?
iii. Did the Plaintiffs and the members of the Class suffer loss or damage as a result of the Certified Defendants’ conduct in respect of the sale of Packaged Bread contrary to any provision of Part VI of the Competition Act?
iv. Are the Plaintiffs and the members of the Class entitled to recovery of their loss or damage pursuant to section 36 of the Competition Act? If so, in what amount or amounts?
COMMON LAW CONSPIRACY
v. At any time during the Class Period did any of the Certified Defendants conspire, agree, or arrange with any other legal or natural person to engage in conduct in respect of the sale of Packaged Bread in contravention of section 45 of the Competition Act with:
a) the predominant purpose of causing harm to any of the Plaintiffs and the members of the Class; or
b) the actual or constructive intent and with the natural result of causing harm to the Plaintiffs and the members of the Class?
vi. Did the Certified Defendants, or any of them, act with any unknown co- conspirators in respect of the sale of Packaged Bread to harm the Plaintiffs and the members of the Class?
vii. Did the Plaintiffs and the members of the Class suffer loss or injury as a result of the common law conspiracy in respect of the sale of Packaged Bread?
viii. What damages, if any, are payable by the Certified Defendants, or any of them, to the Plaintiffs and the members of the Class?
UNJUST ENRICHMENT
ix. Have the Certified Defendants, or any of them, been enriched by the revenue they received from the Conspiracy in respect of the sale of Packaged Bread and, if so, in what amount or amounts?
x. If so, did the Plaintiffs and the members of the Class suffer a corresponding deprivation?
xi. If so, is there a juridical reason why the Certified Defendants, or any of them, should be entitled to retain revenue they received from the Conspiracy in respect of the sale of Packaged Bread?
xii. What restitution, if any, is payable by the Certified Defendants, or any of them, to the Plaintiffs and the members of the Class?
CONSTRUCTIVE TRUST
xiii. Should the Certified Defendants, or any of them, be constituted as constructive trustees in favour of the Plaintiffs and the members of the Class for any revenue the Defendants received from the Conspiracy?
xiv. What is the amount of the revenue, if any, that the Certified Defendants, or any of them, hold in trust for the Plaintiffs and the members of the Class?
PUNITIVE DAMAGES
xiii. xv. Are the Certified Defendants, or any of them, liable to pay punitive damages to the Plaintiffs and the members of the Class having regard to the nature of their conduct and, if so, in what amount?
INTEREST
xiv. xvi. What is the liability, if any, of the Certified Defendants, or any of them, for interest?
COSTS
xv. xvii. Should the full costs of investigation in connection with this matter, including the cost of the proceeding or part thereof, be fixed or assessed on an aggregate basis pursuant to section 36 of the Competition Act and, if so, in what amount?
THIS COURT ORDERS that the Litigation Plan attached as Appendix “A” is approved.
THIS COURT ORDERS that the manner in which Class Members may opt out of the class proceeding and the date after which Class Members may not opt out shall be determined by the Court on a further motion.
THIS COURT ORDERS that the dissemination plan for the Notice of Certification and the costs of disseminating the Notice of Certification will be approved by the Court by way of a separate motion.
THIS COURT ORDERS that the Plaintiffs are entitled to be reimbursed by the Certified Defendants for their disbursements incurred on this motion, fixed at $750,000.00. All remaining cost claims as between the Certified Defendants and the Plaintiffs shall be in the cause.
THIS COURT ORDERS that Walmart Inc. (formerly known as Wal-Mart Stores, Inc.), Empire Company Limited and Grupo Bimbo, S.A.B de C.V. are entitled to their costs of this motion, to be fixed at the same time as the remaining cost claims between the Certified Defendants and Plaintiffs are determined, and payable either directly to these defendants or as a set-off to any cost award that is made against a related Certified Defendant.
THIS COURT ORDERS the Plaintiffs shall pay Maple Leaf Foods Inc. a total of CAD $65,360.84 in respect of its costs of this motion, inclusive of fees, disbursements and HST, within 60 days of the date of this Order.
Morgan J.