SCC Dismisses Quiznos Appeal in Class Certification Case

On February 3, 2011, the Supreme Court of Canada denied leave to appeal in Quizno's Canada Restaurant Corporation v. 2038724 Ontario Ltd., 2010 ONCA 466, concerning the continuing class action launched by two franchisees of a fast food restaurant chain against their franchisor.

On June 24, 2010, Ontario Court of Appeal unanimously upheld the 2009 majority decision of the Divisional Court, which had certified the action as a class proceeding.

The representative plaintiffs allege that the franchisor – Quizno's Canada Restaurant Corporation, Quiz-Can LLC, The Quizno's Master LLC (collectively “Quiznos”) – and its designated distributor – Gordon Food Service, Inc. and GFS Canada Company Inc. (collectively “GFS”) – charged exorbitant prices for food and other supplies that they were contractually bound to purchase for use in their restaurants.

The plaintiffs commenced an action asserting claims for breach of the (former) price maintenance provisions of the Competition Act and breach of contract by Quiznos, and for civil conspiracy by Quiznos and GFS to fix prices and breach of contract. They sought to represent a class of all Canadian Quiznos franchisees in business on or after May 12, 2006.

The defendants opposed the certification motion and Quiznos brought a motion to stay the proceedings.

In 2008, the proceeding was denied class certification. The motions judge held that individual issues concerning the plaintiffs' claims overwhelmed any issues that were common to the entire class.

The decision was appealed to the Divisional Court, which in a 2-1 majority decision reversed the motions judge by finding that there were sufficient common issues which could be determined on an common basis; and deciding the fact that damages raised individual issues for the franchisees was not fatal to class certification.

At the Court of Appeal, Justices Robert Armstrong, Robert Blair and Russell Juriansz affirmed the certification, agreeing with the Divisional majority that although a civil claim for damages under the Competition Act requires proof of harm or damage, proving the existence of price maintenance under s. 61 does not require evidence of damage, and was a common issue for the proposed class in the case. The case is proceeding towards trial on behalf of the class.

David Sterns, Allan Dick and Sam Hall of Sotos LLP acted for the plaintiffs, 2038724 Ontario Ltd. and 2036250 Ontario Inc.

Geoffrey Shaw, Timothy Pinos, Jason Beitchman and Eunice Machado of Cassels Brock & Blackwell LLP acted for the defendants Quizno's Canada Restaurant Corporation, Quiz-Can LLC and The Quizno's Master LLC.

Katherine Kay and Mark Walli of Stikeman Elliott LLP acted for the defendants Gordon Food Service, Inc. and GFS Canada Company Inc.