Canada: Ontario Divisional Court Overturns Refusal To Certify Franchise Class Action In Quizno´s Case

In a 2-1 decision released April 27, 2009, the Ontario Divisional Court allowed an appeal from the dismissal of a class certification motion and conditionally certified a class of present and former Canadian franchisees of the Quizno's quick-service restaurant chain.1

The Plaintiffs, two of more than 400 Canadian Quizno's franchisees, alleged that they had been overcharged for food and other supplies they purchased for use in their Quizno's restaurants. They sought class certification of civil claims for damages against their Quizno's franchisors (the "Quizno's Defendants") for breach of contract and for breach of section 61 of the Competition Act (which, until its repeal and replacement with a civil provision on March 12, 2009, made price maintenance a criminal matter - section 36 of the Competition Act permits civil suits for damages incurred as a result of a violation of a criminal provision of the Act, even without a conviction), as well as a "civil conspiracy" claim against the Quizno's Defendants and Gordon Food Service Inc. and its affiliate (GFS), the primary distributor of many supplies to Canadian Quizno's restaurants.

The motions judge had dismissed the certification motion in its entirety, finding that the plaintiffs had shown neither that the existence of common issues would materially advance the litigation, nor that a class proceeding was the preferable procedure for resolving their claims.2 In particular, the court below found that the plaintiffs had not established that injury from the alleged price maintenance (higher food prices) - an element of liability for the Competition Act and civil conspiracy claims - was a common issue for the proposed class. The motions judge found this failure to be "an avalanche that buries the proposed common issues with an absence of commonality and a proliferation of individual issues". In reaching that conclusion, the motions judge considered the plaintiffs' expert economic evidence on the issue, but found that the expert's opinion was "based on so many assumptions that it becomes speculative and unreliable" and did not provide "feasible" methodologies for establishing injury on a class-wide basis. The motions judge also found that the quality and quantity of the individual issues overwhelmed any common issues and stood "in the way of satisfying the preferable procedure criterion of the prerequisites for certification".

In reversing the decision, the majority of the Divisional Court held that the court below had erred in its approach to the proposed common issues, in its consideration of the expert evidence, and in its analysis of the preferable procedure requirement. Justice Swinton wrote a forceful dissenting opinion, disagreeing with the majority on virtually all issues.

The majority held that failure to establish all elements of liability, including proof of the existence of injury, is not the end of the inquiry into commonality, and that the motions judge had "erred in principle" by focusing on the existence of harm and failing to consider and identify other potential common issues. Finding that "the conduct that could give rise to liability is systemic" and that "[e]very franchisee is subject to the same contract, pricing structure and distribution system", the majority concluded that the alleged "breach" of section 61 of the Competition Act by the Quizno's Defendants and their allegedly "unlawful agreement" with GFS raised common issues for the proposed class, whether or not proof of loss was a common issue. The majority further held that consideration of "whether one of the proposed common issues is overwhelmed or buried by the individual issues is part of the analysis for the preferable procedure criterion."

The majority of the Divisional Court also found that the court below had erred in principle in its consideration of the expert evidence and in its conclusion that proof of loss from the impugned conduct was not shown to be a common issue. Finding that conflicting expert economic evidence had been submitted by the parties on the certification motion, the majority wrote:

It is neither necessary nor desirable to engage in a weighing of this conflicting evidence on the certification motion. The plaintiffs on a certification motion will meet the test of providing some basis in fact for the issue of determination of loss to the extent they present a proposed methodology by a qualified person whose assumptions stand up to the lay reader.

Moreover, the majority also noted that other evidence in the record provided "some basis in fact" for finding that proof of loss was a common issue for the class, based again on the "systemic" nature of claims of the Quizno's franchisees. The majority stated that "[i]t is setting the bar too high to require that evidence be led to support the factual foundation of the proposed methodology."

Turning to the preferable procedure requirement, the majority found that "the motions judge erred in principle by concluding his assessment with his finding that the individual issues in this case overwhelm any common issues" and by "failing to consider the objectives of the CPA."3 The majority held that the plaintiffs' submissions that they would not be able to pursue claims individually, and their accusations of "aggressive, divisive, harsh and retaliatory conduct" by the Quizno's Defendants, established that the goals of access to justice and behaviour modification favoured class certification in this case. Moreover, the majority's identification of common issues, including proof of loss, that would materially advance the claims in the litigation, led it to conclude that "a class proceeding would be an efficient and manageable process."

Justice Swinton wrote a dissenting opinion which would have dismissed the appeal. In so doing, she noted that "with all due respect, the majority is reweighing the evidence and coming to its own findings based on the evidence. That is not the role of this Court on appeal."

Justice Swinton found that "while there may be elements of the claims of breach of the [Competition Act], conspiracy and breach of contract that are common to the class members, they are not a substantial part of the litigation." Rather, "the real work on this case is on the damages side." Moreover, the dissent noted that the motion judge's consideration of the reliability of the plaintiffs' expert evidence was consistent with the approach taken by the Court of Appeal in Chadha v. Bayer,4 and that the court below was entitled to find that the lay evidence did not provide a basis in fact to show that class-wide harm from the alleged price maintenance was capable of common proof.

With regard to preferable procedure, the dissent found that, even if there were considerations of access to justice and behaviour modification that favoured certification, the motions judge did not err in principle in refusing to certify. In Justice Swinton's words, "just because the franchisees are a vulnerable group does not mean every class action brought by them should be certified." Justice Swinton was of the view that the conclusion of the motions judge that the proposed class proceeding would be unmanageable was entitled to substantial deference. Moreover, in her opinion it was also consistent with the conclusions reached in a number of other cases in which courts have refused to certify price maintenance, price fixing and civil conspiracy claims where they were not satisfied that the existence of harm could be proven on a class-wide basis (Chadha; Harmegnies c. Toyota5; Steele v. Toyota Canada Inc.6; Pro-Sys Consultants v. Infineon Technologies AG7; Price v. Panasonic Canada Inc.8).

Leave to appeal to the Ontario Court of Appeal has been sought by the defendants.


1 2038724 Ontario Ltd. et al. v. Quizno's Canada Restaurant Corporation, et al., Court File No. DC 149/08.

2 See the March 24, 2008 issue of The Competitor for more detail: " Competition Act class action fails class certification test". Stikeman Elliott LLP represents a group of defendants in these proceedings.

3 Class Proceedings Act 1992, S.O. 1992, c. 6.

4 (2003) O.R. (3d) 22, leave to appeal to S.C.C. refused, [2003] S.C.C.A. No. 106.

5 [2008] J.Q. No. 1446 (Que. C.A.), leave to appeal to S.C.C. refused, [2008] S.C.C.A. No. 173.

6 2008 BCSC 1063.

7 2008 BCSC 575.

8 (2002), 22 C.P.C. (5th) 379 (Ont. S.C.J.).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions