Tim Hortons class action a 'sour dough' fight

The suit centres on the conversion from a “fresh-baked goods” restaurant to a “microwaved products store,” which two franchise holders argue has driven up the fixed costs of a lowly donut — a Canadian staple — by 11 cents without increasing sales or making the stores more profitable.

http://network.nationalpost.com
May 13, 2010

Tim Hortons class action a 'sour dough' fight
Jim Middlemiss

As Tim Hortons prepares for Friday’s annual general meeting at Ryerson University in Toronto, its lawyers are a few blocks away in court Thursday fighting a $1.95-billion class action brought by disgruntled franchise owners.

The suit centres on the conversion from a “fresh-baked goods” restaurant to a “microwaved products store,” which two franchise holders argue has driven up the fixed costs of a lowly donut — a Canadian staple — by 11 cents without increasing sales or making the stores more profitable.

Tim Hortons management called the lawsuit, launched in the June, 2008 “frivolous and completely without merit” and “doesn’t reflect the opinion of the vast majority of franchisees.”

Interestingly, the firm hedges its bet slightly in its 2009 annual report about the case adding, “however, there can be no assurance that the outcomes will be favourable to us or that it will not have a material adverse impact on our financial position or liquidity in the event that the ultimate determinations by the court and/or appellate court are not in accordance with our evaluation of this claim.”

The Thursday motion before Ontario Superior Court Justice George Strathy is preliminary squabbling that will set the stage for how the donut bounces later this December when the case is finally heard.

It’s shaping up to be a real sour dough fight. The plaintiff’s certification record comprises one volume of 412 pages and 24 exhibits, a Timbit compared to the defence, which has a competing summary judgment motion that seeks to dismiss the lawsuit entirely. It’s a real apple fritter by comparison, containing eight volumes, including 2,732 pages and 61 exhibits. Let’s hope Justice Strathy has a lot of French Crullers to consume. He’s going to need it to get through that many documents.

The franchise holders’ lawyers, Jerome Morse and Lori Stoltz of Adair Morse in Toronto, are taking exception to a move by Tim Hortons lawyer, Peter Howard of Stikeman Elliott in Toronto, to bring the summary judgment motion at the same time that the certification motion will be heard next fall.

The summary judgment motion asks the court to dismiss the lawsuit — which is based on breach of contract and negligence.

The franchisees argue that Tim Hortons has cast its summary judgment motion “so broadly” as to require them to argue about the merits of the case, normally considered a no-no at the certification stage. Rather, that’s saved for trial.

The plaintiffs want the Justice Strathy to hear and rule on the certification, and allow for an appeal period, prior to hearing the summary judgment motion.

Tim Hortons lawyer argues that the parties had earlier agreed to the timing of the motions and can’t change the litigation batter in the middle of the recipe.

Jim Middlemiss

http://network.nationalpost.com/NP/blogs/legalpost/archive/2010/05/13/tim-hortons-class-action-a-sour-dough-fight.aspx


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