Court awards Target Canada pharmacists $100,000 for legal proceedings, Marina Strauss

Ontario Superior Court ruled on Wednesday that the pharmacists should get $100,000 from Target Canada to cover their legal and financial advice in the insolvency proceedings of the chain, which is closing all 133 of its stores by mid-May.

The Globe and Mail
February 18, 2015

Court awards Target Canada pharmacists $100,000 for legal proceedings
Marina Strauss


Target’s franchised pharmacists are owed hundreds of thousands of dollars. Tim Fraser For The Globe and Mail

Target Canada’s franchised pharmacists have won a victory in their battle with the insolvent U.S.-owned retailer.

Ontario Superior Court ruled on Wednesday that the pharmacists should get $100,000 from Target Canada to cover their legal and financial advice in the insolvency proceedings of the chain, which is closing all 133 of its stores by mid-May.

Justice Geoffrey Morawetz also agreed to name the pharmacists’ association as well as their law firm, Sutts, Strosberg LLP, and BDO, their financial adviser, as their official representatives in the matter.

“The situation facing the pharmacists is not pleasant,” Justice Morawetz said in his ruling.

The pharmacists’ plight underlines the ripple effects of Target’s failure on its array of stakeholders, ranging from suppliers to landlords. The discounter’s pharmacists had each invested more than $50,000 in inventory to team up with Target for its much-touted arrival in 2013, encouraged by projections of high-volume prescription sales and heavy shopper traffic.

But Target Canada’s losses continued to mount and, on Jan. 15, it filed for court protection from its creditors, leaving hundreds of unsecured creditors in the lurch. For its pharmacists, it means having to sell each of their patient records and supplies to a third party, let go staff and vacate their drugstore.

“These people need all the help they can get,” William Sasso, a lawyer for the Pharmacy Frachisee Association of Canada, which represents the Target pharmacists, said in an interview Wednesday.

On Jan. 26, Target told its franchised pharmacists they had to leave in 30 days. Last week, however, Target responded to the pharmacists’ concerns by saying the drugstores could get more time, up to March 30 in some cases.

As a result of Target’s “accommodation,” Justice Morawetz turned down the pharmacists’ bid to get still more time to stay in their drugstores before having to abandon them. “This accommodation represents, in my view, a constructive, practical and equitable approach to address a difficult issue,” the judge said.

Justice Morawetz noted the pharmacists face many “transitional” issues. “First and foremost is dealing with the patient records and ensuring uninterrupted delivery of prescription drugs to all such patients.” As well, they have to deal with relocating or shutting down their pharmacies and returning some products to suppliers.

“This is not a simple case where the franchisee receiving the disclaimer notice can simply walk away from the scene,” the ruling says. “From a professional and regulatory standpoint, they still have to participate in the process.”

Meanwhile, some suppliers are fighting with Target to get back the goods they shipped to it in the 30 days before the retailer filed for creditors’ protection. If the proceedings were a bankruptcy, the vendors would have had the right to ask to retrieve their 30-day inventory.

Two baby-product suppliers, ISSI Inc. and Elfe Juvenile Products, suggest in court filings that they shipped large amounts of goods to Target in those 30 days. “It is clear from the communications from Target Canada personnel with whom ISSI and Elfe were dealing that they continued to represent, either directly or indirectly, that Target Canada was financially sound, its future was bright and that 2015 would be a great year,” Shell Bern, president of ISSI and Elfe, said in a filing.

Late Wednesday, the monitor, Alvarez & Marsal Canada Inc., said inventory on-hand as of Dec. 15 was about $623.1 million, excluding goods in transit, while inventory on-hand as of Jan. 15 was about $526.6 million, excluding goods in transit.

Risks: $50,000 Ontario Appeal award for one franchisee's pain and suffering, 95 per cent of legal fees are paid by franchisors, Activism over the internet, Advice from franchise lawyer only, Agree with proposed law or you get nothing, Anonymous: leaderless on-line resistance subculture, Appropriate franchise law, Arthur Wishart Act (Franchise Disclosure), 2000, Canada, Arthur Wishart Amendment Act (Franchise Disclosure), 2010, Canada, Attorney seeds the destruction of his own client's case, Bad faith and unfair dealings, Bank calls in debt, Bank won't finance deal because they know something you don't, Banks are industry cheerleaders, Big Franchising, Big Pharma, Blame themselves, Blocking for the industry, Blogs: most effective means to justice, Brand backlash: franchisees suffer because brand owners screw up, Breach of duty, Business model had never created adequate investor returns, Buying a job, Call for a public enquiry, Call for franchise law, Canada Small Business Financing program, Cannon fodder, Career Limiting Move, CLM, Caveat emptor canard, Class action only as good as the lawyers involved, Coerced waiver of punitive damages, Comments on article are interesting, Commercially reasonable exercise of discretion, Companies' Creditors Arrangement Act, CCAA, Contingency fees, Contracts seen as unenforceable or void, Courts extremely picky about shoddy disclosure practices, Credence good fraudulent expert, Credence goods: taking advantage of the innocents, Cruelest lies are often told in silence, Disclosure document must disclose all material facts, Dispute resolution means franchisee goes broke, Don’t owe your lawyer money, Don't use a brand name franchise lawyer, Down-and-dirty CCAA, Employees misclassified as franchisees or independent contractors, Exponential increase in franchise bar services ($ and influence), Externalities: cheap business decision when someone else pays, Fair dealings: treat assets as if they were their own, False assumptions, multiple, Federal insolvency laws used to shirk legal claims, Fee reduction always has a catch, Fee surprises at settlement time, First we kill the lawyers…, Franchise banker, Franchise bubble will crash much harder (non-franchised), Franchise bar: Serving those most able to pick up the tab, Franchisee consultant, Franchisee leader, Franchisee revolt, Franchisee-on-franchisee opportunism, Franchisees are practice clients that help keep the lights on until franchisor clients show up, Franchisees dragged into complex legal dispute their franchisor created, Franchisee, independent contractor or employee?, Franchising Opportunism paper, Franchisor abandonment, Franchisor controls both wholesale costs and retail prices, Franchisor insolvency, intentional, Franchisor knew they were selling money losing concepts, Franchisors want the minimum regulation they can get away with, Fraudulent non-disclosure, Frenzied lobbying, Futility of taking legal action, Good faith + fair dealings = false hope, Government guaranteed loans, Government guaranteed loans, abolish program, Government guaranteed loans used a great deal in franchising, Government guaranteed loans, massive loan defaults, Government guaranteed loans: program loses $1, franchisee families lose $10, Gripe sites, Hacktivists: internet social justice activists, Hates publicity, Harassment, Intimidation, Hope springs eternal in the hearts of the delusional, Ideas once outrageous are now considered normal, Imbalance of information and power, Immigrants as prey, Independent franchisee association, Independent franchisee association betrayal, Individuals with a very successful career history, Industry Canada, Insolvency laws need to protect franchisees as well, Insolvency strips employees' severance payments, Insolvency trustee, consultant and auditor same firm, Intentional franchisor insolvency creates huge fees for legal, accounting, consulting firms, Internet information sharing, Investors steered to specific attorney, Jealously guarded monopoly on the provision of legal services, Joint Employer: franchisor legally liable along with franchisee for labour violations, Knew or could have reasonably been expected to know, Lawsuits, individual, Lawyering up without 2nd opinion is a trap, Lawyers can serve franchisors or franchisees, never both, Leaderless Franchise Network, LFN, Leadership development, Lease obligations make franchisees pay even if not in business, Lender's due diligence not done properly, Lending duty, Lending duty never enforced via regulation or litigation, Lending is subject to expert fraud because it is a credence good service, Loan repudiation, Loser pays court costs, Material facts were not disclosed, Materially misleading information, McLaw: toothless legislation designed to protect the dominant parties, Ministry of Government and Consumer Services, Ontario, Mom-and-Pop franchisees at greatest risk, Money influencing public decision-making, Moral Hazard: a party insulated from risk behaves differently than if the full risk were present, Most lucrative form of commercial lending, franchising, Network effects: unintended consequences when dealing with communities, No real penalties for abuse of federal insolvency laws, Odious debts, Office of the Superintendent of Financial Institutions, Canada, Ombudsman for Banking Services and Investments, Canada, On Cooling the Mark Out (Erving Goffman), One franchisee turned against the other (action very difficult), Online reputation grows exponentially, Operating losses from Day 1, Opinions at odds with the Minister, Opportunism Test: If asset ownership were reversed, would decision likely change?, Overconfidence effect, Pawns in a game they can't win, Political champions, Predatory franchise lending, Privacy laws violated, Punitive, exemplary and/or aggravated damages, Regulatory capture breeds its own incompetence, Reputational risk, Restructuring legislation is deficient. Reverse onus on good faith and fair dealing, Right to associate and right to harass, Rules for Radicals: make them play by their own rules, Secured creditors (banks) 100% covered in dodgy insolvency, Settlement just covers fees, Shame - humiliation emotion, Sharecropping, Shareholder activism forces franchisor action, Shill, Sincere ignorance, Sincerity, Situationism psychology: people are influenced by external factors more than internal traits, Social media triggers unskilled franchisor reaction, Social proof: in new situations, you assume others know more so you follow their lead, Sophism: an argument used to deceive, Spouse can sue for losses also, Spouse dragged into negative investment, Spouse needs independent advice, State refuses to even listen, State sanction, Stores shuttered, Strategic lawsuit against public participation, SLAPP, Sub-prime lending practices done in franchising, Sue lender for failing to do their lender's due diligence, Sue the lawyer that created the disclosure document, Sunk Cost Fallacy: very hard to resist putting good money after bad, Sunshine is the best disinfectant, Suppliers and landlords act as if they were the franchisor, Symbiotic relationships (industry, banks, lawyers), Talk to former franchisees, Taxpayers end up paying for private gain, Test for franchisee, independent contractor or employee, The burned hand teaches best, The Fixer fixes for a hefty price, The key is to commit crimes so confusing that police feel too stupid to even write a crime report about them, Thin-skinned politicians not doing their duty, Threats against supporters of franchisee association, Trade association fronts and defends best and worst franchisors, Unskilled and unaware bias (Dunning–Kruger effect), Vacuum of information favours dominant party, Wage theft, Victims are highly intelligent and educated, War of attrition, What does the independent franchisee association say?, White-knight lawyer turns black, Who pays for the research?, Wiki: a franchisee-created wiki made from your franchisor's documents, Wives free to sue franchisor, Write a letter of complaint, Canada, 20150218 Court awards

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License