Canadian Lawyer InHouse

JULY/AUGUST 2018 8 INHOUSE News Roundup BMO Financial Group did a week of ser- vice in April and it was the group's third time doing a sponsor week. BMO also reaches out to its external counsel and has brought on McCarthy Tétrault LLP and Blake Cassels & Graydon LLP. "Not only are they doing a lot of good pro bono work as a legal department, but they are really becoming true corporate leaders in access to justice by telling their external firms it's important to them," says Burns. RBC's internal lawyers also took a turn on the hotline in March and Weston did so last year and also reached out to its external counsel. Others include Chubb Insurance, Ontario Power Generation and Interac Corp. with half a dozen lawyers each spend - ing some time on the phones with individu- als who could not otherwise afford to access legal help. The Association of Corporate Counsel in Ontario has also spent a week's worth of time on the phones. "For small teams, it's a great way to spend the day together and it's a good team- building opportunity. They really enjoyed it. Chubb served 77 clients that day," says Burns. Up to 80 low-income Ontarians can call in to the hotline for free legal advice every day. About 80 per cent of queries to the hot - line are resolved with a single call. Before a team of lawyers takes on a day at the hotline, they can hold a conference call to discuss who is comfortable taking on certain kinds of matters. "For the sponsor week, we had a confer - ence call with BMO and Blakes and the law- yers signed up to answer the various lines based on their expertise. A lot of them are willing to take housing even if it's outside their area of expertise," says Burns. "But I don't think anyone feels they are giving legal advice in an area they have no expertise in. "Once you tell them about the possibili - ties and the opportunities, whether it's an entire legal department or reaching out to external counsel, I find the legal depart- ments want to be part of those opportuni- ties just as much," says Burns. "Every single person says: 'It is so differ- ent from my regular day and so rewarding.' For many people, if we weren't here, there is nowhere else for them to turn." IH Pet Valu wins costs for failed class action A one-time Pet Valu franchisee is li- able for the franchisor's costs in class action litigation he brought against Pet Valu Canada Inc., the Ontario Superior Court of Justice ruled in May. In Pet Valu Canada Inc. v. Rodger, 2018 ONSC 3353, Justice Sandra Nishikawa held that the individual officer, director, share - holder and guarantor of the representa- tive plaintiff in a $100-million class action lawsuit against Pet Valu in 2009 was liable for the significant costs awards — in excess of $1.7 million — that Pet Valu had been awarded after defeating the class action. Robert Rodger was the sole shareholder of 1250264 Ontario Inc. Since 2005, he had been a Pet Valu franchisee, and in 2009, he attempted to sell his franchise back to Pet Valu, a wholesaler and retailer of pet food, supplies and related services. In December 2009, 1250264 Ontario Inc. commenced a class action against Pet Valu alleging breach of contract and breach of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000 c. 3. The gist of the claims was that Pet Valu had not shared volume rebates it received from suppliers with the franchi - sees and that it overcharged franchisees for certain items. After nearly seven years of litigation, the class action was dismissed and Pet Valu was awarded its costs of $1,703,896. In January 2012, while the class action was still pro - ceeding, Rodger sold the assets of 1250264 Ontario Inc. to a third party and left the Pet Valu franchise system. Issues before the Ontario Superior Court of Justice were: i) whether Rodger was liable for the costs awards pursuant to the indem - nification provision in the franchise agree- ment he had signed with Pet Valu in 2005, which specified that the franchisee agreed to indemnify Pet Valu for costs incurred in defending any action or claim the fran- chisee brought against Pet Valu; ii) whether Rodger was liable for the costs awards under the agreement's guarantee; iii) whether Pet Valu's claim was statute-barred by the Limi - tations Act; and iv) whether Pet Valu had re- leased its claim against Rodger in the course of previous litigation between the parties. In granting Pet Valu's motion for sum- mary judgment and dismissing Rodger's cross-motion to dismiss the claim, Nishika- wa ruled in favour of Pet Valu in all instanc- es. She found that the indemnification pro- vision in the franchise agreement applied to the costs awards, and she rejected Rodger's assertion that he was not personally bound by that provision. Rather, the judge found that Rodger had signed the franchise agree - ment on his own behalf as well as on behalf of 1250264 Ontario Inc. and that he intend- ed to be personally bound to the agreement as a franchisee. During cross-examination, Rodger had admitted that he had received independent legal advice and was aware that he was exposed to the risk of a poten - tial adverse costs award in the class action. "The unique part of this scenario is that, usually in these cases, in class actions, the potential cost consequences to representa- tive plaintiffs are limited by indemnification by class counsel" if there is an adverse cost award to the plaintiffs, says Derek Ronde, a litigation partner at Cassels Brock & Black- well LLP in Toronto who, along with co- counsel Kate Byers, represented Pet Valu. If the representative plaintiffs' law firm does not cover costs to plaintiffs, "third-party funders can pay for those expenses or the Ontario Class Proceedings Fund. Unfortu - nately, in this case, that was not done." Since 1250264 Ontario Inc. had sold its assets during the litigation, Pet Valu was not able to enforce the judgment against the company — "it was a shell," says Ronde — and so action was brought against Rod - ger instead. "The other unique factor [in this case] was that there was a contract between the parties," he says. "That's not often the case between plaintiffs and defendants in a class action." A thorough commercial franchise agree - ment between the parties included an in- demnification provision and also a personal guarantee by Rodger of 1250264 Ontario Inc.'s obligations. Pet Valu was able to rely on those provi - sions to have Rodger be liable for the fran- chise corporation's liabilities, Ronde told Legal Feeds, and "the indemnification and guarantee allowed us to pursue Mr. Rodger for what [1250264 Ontario Inc.] owed." IH

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