Mr. Sub Tainted Meat Appeal Dismissed in Class Action Lawsuit

The Supreme Court of Canada dismissed an appeal in a class action lawsuit accusing Maple Leaf Foods of hurting restaurants’ sales during a 2008 listeriosis outbreak.

Mr. Sub restaurants were reportedly affected by a meat shortage lasting approximately six to eight weeks after Maple Leaf products were recalled due to contamination at one of its plants.

At the time of the outbreak, Mr. Sub and Maple Leaf Foods had an exclusive supply agreement under which Maple Leaf Foods was the exclusive supplier of ready-to-eat meats served in Mr. Sub restaurants.

The Supreme Court heard the appeal on Oct. 15, 2019 and issued judgment on the Mr. Sub class action lawsuit on Nov. 6, 2020. In a 5-4 decision, the Supreme Court ruled that Maple Leaf did not owe the Mr. Sub franchisees a duty of care.

According to CBC News, the listeriosis outbreak was the deadliest in Canadian history.

There is reportedly no evidence that any customers of Mr. Sub became ill from consuming tainted meat. However, the franchisees filed a tainted meat class action lawsuit against Maple Leaf Foods alleging they suffered damage to their reputation and lost sales due to the recall.

The Maple Leaf Foods tainted meat class action lawsuit Canada sought compensation for lost sales, past and future profits, capital value of the franchises, and goodwill.

Supreme Court Majority Sides with Maple Leaf Foods

Maple Leaf Foods filed a motion for summary judgment seeking to dismiss the claims in the tainted meat class action lawsuit. However, the motion judge found that Maple Leaf Foods owed the Mr. Sub franchisees a duty to supply meat products that are fit for human consumption. The court determined that the tainted meat posed a substantial danger.

Maple Leaf Foods subsequently appealed the tainted meat class action lawsuit, and the appellate court determined that the meat supplier did not owe a duty of care to the Mr. Sub franchisees. The Mr. Sub franchisees appealed this decision to the Supreme Court of Canada, which agreed with Maple Leaf Foods that it did not owe a duty of care to the Mr. Sub franchisees and dismissed the appeal.

“Maple Leaf does not owe a duty of care to the franchisees in respect of these matters,” the five-judge majority wrote. “Though the common law readily imposes liability for negligent interference with and injury to the rights in bodily integrity, mental health and property, it has been slow to accord protection to purely economic interests. Pure economic loss may be recoverable in certain circumstances, but there is no general right in tort protecting against the negligent or intentional infliction of pure economic loss.”

Dissenting Justices Say Maple Leaf Owed Duty of Care

Four justices dissented, concluding that “it is just and fair to impose a novel duty of care on Maple Leaf in the circumstances,” and therefore the appeal should be allowed to proceed.

They noted that the exclusive supply agreement constitutes a “close and direct relationship” between the parties and that the Mr. Sub franchisees were in a “particularly dependent and vulnerable relationship” with Maple Leaf Foods. As a result, they conclude that Maple Leaf Foods had a “duty to take reasonable care not to place unsafe goods into the market” that could cause Mr. Sub to suffer economic loss as customers reasonably respond to the potential health risk.

“Subject to the other requirements of negligence being met, it is fair and just to hold Maple Leaf responsible for the franchisees’ direct economic consequences of being associated with unsafe Maple Leaf products while they posed a danger to consumer health,” the dissenting justices said.

Mr. Sub Franchisees’ Lawyers “Disappointed” With Decision

Peter Kryworuk, a lawyer representing the Mr. Sub franchisees, told CBC News that he and the franchisees are “disappointed with the result.”

“As a result of this decision, 424 Mr. Sub franchisees which suffered significant losses, through no fault of their own as a result of the Maple Leaf listeria outbreak, will not have the ability to obtain compensation for their losses,” Kryworuk wrote in an emailed statement.

He says that the Supreme Court majority took a restrictive approach when evaluating the claims, holding that the manufacturer’s duty to supply safe products was owed to the consumers and that the franchisees had the ability to protect their businesses through contracts or insurance policies.

Kryworuk says that the Supreme Court’s ruling will have “significant impacts in product liability and franchise law,” and that it will require small businesses to “proactively seek to protect themselves through contract negotiations with large manufacturers” and by purchasing pricy insurance policies “which may not be possible for many franchisees and small businesses.”

Do you think Maple Leaf Foods should bear some responsibility for damage to Mr. Sub restaurants’ sales and reputations due to the meat recall? Let us know in the comments below.

The Maple Leaf Foods Tainted Meat Class Action Lawsuit is 1688782 Ontario Inc. v. Maple Leaf Foods Inc., et al., Case No 38187, in the Supreme Court of Canada.

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