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 intra-class debate".
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 informed."
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.
A copy of the decision can be found here.
Geoffrey Shaw, Derek Ronde, Eric Mayzel, and Robert Kligman of the Cassels Brock Advocacy Group and Franchise Group acted for Pet Valu in this matter.
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