Ontario Superior Court Pares Down Economic Tort Conspiracy

A recent summary judgment decision rendered by Madam Justice Anne M. Molloy of the Ontario Superior Court of Justice has significantly pared down the scale of an economic tort conspiracy claim by Meditrust Healthcare Inc. against a group of defendants in the retail pharmacy industry, including Shoppers Drug Mart, the Canadian Pharmaceutical Association, the Ontario Pharmacists’ Association and a number of individuals. Meditrust’s essential claim in the action is that the defendants conspired to put it out of business as a mail-order pharmacy. The Shoppers Drug Mart group of defendants brought a motion for partial summary judgment on the basis that most of the claims asserted by Meditrust were claims that could be brought, if at all, only by the Meditrust subsidiaries that actually carried on the business of mail-order pharmacy. The moving parties took the position that Meditrust was a holding company seeking to recover damages suffered not by it but by its subsidiaries, contrary to the rule in Foss v. Harbottle. Meditrust argued that the rule in Foss did not apply since the conspiracy was directed at Meditrust such that the damage was sustained directly by it including the destruction of the value of its assets including its subsidiaries. In July 6, 2001 reasons, Madam Justice Molloy agreed with the moving parties, and granted partial summary judgment dismissing the claims that fell into the category of damages suffered by subsidiaries. The alleged value of the dismissed claims is approximately $60 million.

Mark A. Gelowitz of Osler, Hoskin & Harcourt LLP acts for the Shoppers Drug Mart defendants. Ronald Manes and David Golden of Torkin Manes Cohen Arbus LLP act for Meditrust. Meditrust has filed an appeal from the summary judgment in the Ontario Court of Appeal.