Published on July 6, 2010
Posted in: Allan Dick, David Sterns, Midas, News
The Ontario Court of Appeal released a decision today confirming that Canadian Midas dealers cannot be forced to waive or release their rights to participate in a class action lawsuit against Midas Canada in order to sell or renew their franchise agreement.
Previously, a lower court rejected Midas’ argument that the dealers were precluded from launching a class action due to release of liability provisions in the dealers’ franchise agreements. The dealers, represented by Sotos LLP, successfully argued that their right to band together as a class was protected under the Arthur Wishart Act (Franchise Disclosure), 2000.
Today, the Court of Appeal upheld that decision and dismissed Midas’ appeal. The Court sided with the Midas dealers on each ground of the appeal, holding that the franchisees were indeed protected by the Arthur Wishart Act and could not surrender their right to a class action.
The decision has big implications for franchisors in Ontario who seek to protect themselves from class action lawsuits. As Justice MacFarland notes in the decision:
 To permit the appellant to require the class members to release any claims they might have against the appellant in order to take advantage of any other rights they might have under the Agreement, in my view, is simply contrary to the spirit, intent and letter of the Act. Where a franchisor insists upon such waiver or release, s. 11 makes it clear that any such waiver or release will be void.
This ruling marks the second big class action win in the Ontario Court of Appeal for Sotos LLP in just two weeks. On June 24 the Court upheld the certification of Canadian Quiznos dealers in a separate case.