In a landmark unanimous franchise class action decision, the
Ontario Court of Appeal has overturned a lower court decision to
invalidate certain opt out notices delivered in a class proceeding
between Pet Valu Canada Inc. ("Pet Valu") and its
franchisees. The notices had been invalidated by the Ontario
Superior Court of Justice due to allegations of misleading
information and unfair pressure by a group of class members (the
"Concerned Pet Valu Franchisees", or "CPVF")
who opposed the class action.
The Court held that the CPVF's campaign to encourage other
franchisees to opt out of the class action was a proper expression
of opinion by these franchisees. The Court confirmed that class
members have an "unassailable right to speak out in opposition
to [a] class proceeding in an attempt to convince other class
members to opt out" in the context of "acceptable
In looking at the potential limitations on the CPVF's right
to carry out its campaign, the Court found that the campaign did
not constitute coercion or misinformation, or cause any
intimidation among class members. Rather, class members were
afforded access to objective information regarding the class action
to counter the opinion of the CPVF (by way of having received the
notice of certification and access to class counsel's website)
and there was "no evidence to support a finding that opt-outs
by individual class members were not voluntary or fully
In coming to its decision, the Court took issue with the
representative plaintiff's failure to promptly notify the
motion judge of its concerns regarding the CPVF's campaign. The
Court was also critical of the representative plaintiff's
inability to "tender evidence from a single other class member
indicating that the CPVF's campaign improperly influenced the
decision to opt out of the proceeding."
Importantly, the Court held that Pet Valu was not implicated or
involved in the CPVF's actions, which confirmed the earlier
findings of the motion judge.
This decision is important for franchisor defendants, class
members, and class proceeding litigants generally. It provides
guidance and insight into permissible conduct by class members who
oppose a class action and seek to encourage fellow class members to
opt out. It also provides insight into what is expected from all
class proceeding litigants in a post-certification environment.
Lastly, it confirms that a decision to invalidate opt-out notices
will only be made in the most extraordinary of circumstances, where
there is clear evidence of intimidation and coercion.
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