Ontario Court Decides Motion in Loblaws Bread Price Fixing Class Action

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.Civil Litigation, Class Action Defence, Commercial, Commercial Litigation, Contract Disputes0 Comments

The recent Ontario Superior Court of Justice decision in David v. Loblaw, 2018 ONSC 198, involved a motion brought by the plaintiff to challenge the terms of a $25 consumer card program that the Loblaw defendants (“Loblaws”) had offered to consumers after various class actions were commenced in connection to a bread price fixing scheme that Loblaws participated in from 2002 to 2015.

Customers may sign up for the consumer card, either online or by paper application, by declaring that he or she had purchased bread from Loblaws during the relevant time period.  The application advised customers that sign up for the consumer card that they will still be eligible to receive “incremental compensation” and recommended they seek legal advice from plaintiff’s counsel or from independent counsel.  The application also included a form of Release, which read in part as follows:

In exchange for this twenty-five (25) Canadian Dollar Loblaw Card you hereby release and forever discharge Loblaw (“Loblaw” includes Loblaw Companies Limited, its parent corporation George Weston Limited and their affiliates as well as all of their current and former officers, directors, and employees) from any and all claims or causes of action (of whatever nature or kind) for damages, costs or other relief that you may have relating to or otherwise in connection with any overcharge on the price of packaged bread in the period between January 1, 2002 and March 1, 2015 to the extent of twenty-five dollars.

The plaintiff argued that the consumer card program was misleading to putative class members because it included hidden terms that were not in the best interests of the customer.  Furthermore, since the consumer card must be used at Loblaws, this only served to benefit Loblaws with increased marketing and profit opportunities.  The plaintiff sought an order from the court under section 12 of the Class Proceedings Act, 1992 to restrict Loblaws from communicating with putative class members about the consumer card program.

In response, Loblaws stated that the consumer card program was an early attempt to make amends and compensate customers for its involvement in the price fixing scheme and it provided full and fair disclosure of all terms of the program.  For example, the application advised the customer about: (a) the existence of the class action lawsuits; (b) the need to obtain legal advice; and (c) the $25 will be set-off or deducted from any damages awarded to class members or reached in a settlement.

The Court found that the consumer card program was not misleading to customers at all, and instead, it was ample and fair because “the explicit language of the application form and accompanying Release is appropriate and serves to counter any misinformation that the consumer may have gleaned from press coverage of the card program”.  Therefore, the stringent test for the court to interfere with the defendant’s right to communicate with putative class members in an attempt to settle part of its exposure to the class action litigation was not met.  The Court dismissed the motion.

The Court went on to state that any proposed settlement of the class actions must ultimately be approved by the courts for fairness, reasonableness and adequacy, including examining whether a “coupon settlement” was appropriate and fair in the circumstances.  These types of settlements have been criticized because they fail to significantly modify corporate behavior as the coupons can only be used at the store in question.

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About the Author
Nick P. Poon, B.Sc. (Hons.), B.A., J.D.

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.

Practitioner in Civil Litigation with a focus in insurance defence and commercial litigation. Bio | Contact

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