In 2038724 Ontario Ltd. et al v. Quizno’s Canada Restaurant Corporation, the Ontario Divisional Court allowed an appeal and granted certification of a class proceeding on behalf of Canadian franchisees of the Quizno’s Restaurant Chain on the condition that they file a new litigation plan with the motions judge. The franchisees had claimed that a distribution agreement imposing mark-ups and sourcing fees on inventory purchased by the franchisees resulted in a breach of the price maintenance provisions of the federal Competition Act, a breach of contract, a breach of the duty of fair dealing under Ontario’s Arthur Wishart Act and a conspiracy amongst the defendants to fix prices.
The court held that the motions judge erred in principle by focussing on proof of damages and failing to consider and identify other common issues. In reaching its conclusion, the court was influenced by the fact that the franchisees were direct purchasers required by contract to buy products from the specified distributor. It also held that a class proceeding was preferable to any alternative to resolving the claim because it would best advance the goals of judicial economy, access to justice and behaviour modification.