Ontario Court Strikes Several Franchisee Claims In Shoppers Drug Mart Class Proceeding

In a recent decision of the Ontario Superior Court of Justice, Spina v. Shoppers Drug Mart Inc. 2012 ONSC 5563 ("Spina"), the Honourable Mr. Justice Perell heard a motion for certification of a franchise class action as well as a cross-motion by the defendant under Rule 21 to strike various elements of the plaintiffs' amended statement of claim. Although the decision deals with a multitude of legal issues concerning the striking of pleadings and certification, it provides helpful guidance to franchisors in respect of typical claims that are brought by franchisees in rebates-related claims. Specifically, Justice Perell held that Ontario courts will take a serious look at boilerplate claims concerning unjust enrichment, breach of fiduciary duty and breach of the duty of good faith to see if such claims pass muster in light of what the parties' franchise agreement actually reads regarding the parties' rights concerning rebates. The plaintiff franchisees, who were drug store pharmacists, brought a claim that asserted breach of contract claims against the franchisor, Shoppers Drug Mart Inc. ("Shoppers"), arguing that Shoppers had breached the terms of the "Associate Agreements" with their franchisees in various ways. In addition, the plaintiffs alleged that Shoppers breached the common law duty of good faith and statutory duties of fair dealing under section 3 of the Arthur Wishart Act (Franchise Disclosure), 2000 ("AWA"). The plaintiffs made further claims for breach of fiduciary duties and unjust enrichment. Finally, the plaintiffs alleged that Shoppers had interfered with their right to...