There are three cases of particular interest to the franchising community, that are soon to be argued or are currently waiting for judicial pronouncement. Notably, all of them involve class proceedings.
In 405341 Ontario Limited v. Midas Canada Inc., franchisees commenced a class action against their franchisor. The action has been certified. However, a peripheral issue has dominated the discourse about this case. In a decision on October 16, 2009, Justice Cullity of the Ontario Superior Court of Justice found sections of Midas’ standard Franchise Agreement void where they required that, on renewal or transfer, franchisees were required to provide Midas, inter alia, with a full and final release. Justice Cullity also found that the Arthur Wishart Act could apply to Midas franchisees located outside of Ontario. That decision is now before the Ontario Court of Appeal which will hear arguments from counsel in the next few months.
2038724 Ontario Ltd. et al v. Quizno’s Canada et al. was certified as a class action by the Ontario Divisional Court which overturned the motion judge’s decision not to certify the class. However, even the Divisional Court was split on the issue of whether or not to certify this action as a class proceeding where there are allegations of price fixing contrary to Canada’s Competition Act. The Court of Appeal granted leave to appeal the Divisional Court’s decision and the appeal was argued on January 27, 2010. Quiznos was represented by Geoffrey Shaw, Tim Pinos and Eunice Machado of Cassels Brock. The Court of Appeal has reserved its decision and we now await the outcome.
The Supreme Court of Canada will soon shed some light on whether parties to a contract containing an arbitration clause can nonetheless proceed through the Courts as a class proceeding, thereby avoiding arbitration. In Michelle Seidel v. Telus Communications Inc. the applicant's contract with the respondent for cellular services contained an arbitration clause. The applicant commenced a class action against the respondent. The respondent sought a stay of the action on the basis of the arbitration clause. This matter is currently scheduled to be heard in May, 2010.