Shoppers Drug Mart faces proposed class action for alleged 'unethical corporate practices'
A former Shoppers Drug Mart franchise owner has filed a proposed class ac‐ tion lawsuit against the Canadian retail pharmacy chain, and its parent com‐ pany Loblaw, alleging the companies imposed "un‐ safe and unethical" corpo‐ rate practices on franchise owner pharmacists to in‐ crease profits.
The claim was filed in On‐ tario Superior Court last week and intends to cover both franchise owners whose agreements have been termi‐ nated since 2014 and current franchise owners in Ontario.
It has not yet been certi‐ fied or tested in court.
The crux of the lawsuit concerns how corporate practices like imposing tar‐ gets on the volume of med‐ ication reviews, cutting back support staff hours, and oth‐ er mandates to increase revenue, have allegedly put Shoppers Drug Mart fran‐ chise owners, who are also pharmacists, in an "irre‐ deemable conflict of in‐ terest."
"When you put policies on the associate owner that re‐ quire [them] to breach their professional obligations at the risk of losing their fran‐ chise ... you place them in a conflict of interest between their obligations to patients and their obligations to the business," said lawyer Aly Ha‐ ji, from Ricketts Harris law firm, which filed the pro‐ posed class action.
The consequences of that conflict could include a phar‐ macist having their licence suspended or revoked, ac‐ cording to the lawsuit.
WATCH | Shoppers Drug Mart faces proposed class action lawsuit:
'Case has no merit': Loblaw
Loblaw and Shoppers Drug Mart have not yet filed statements of defence in the case. But in an email state‐ ment, Loblaw spokesperson Dave Bauer told CBC News "this case has no merit what‐ soever, and we intend to vig‐ orously defend it."
The lawsuit was filed in the wake of a CBC News in‐ vestigation, which revealed how some former Shoppers Drug Mart pharmacy employ‐ ees believe the company is taking advantage of Ontario's medication reviews program, MedsCheck, by pushing staff to bill the government for consultations patients don't necessarily need.
And how despite the chain's president denying the existence of targets for those services, dozens of internal records from frustrated phar‐ macists showed the chain has targets for those profes‐ sional services and corporate management pressured own‐ ers to meet those numbers.
The Ontario College of Pharmacists has since said it's working with a legal team to explore its options after thousands of pharmacy em‐ ployees came forward to share "deeply troubling" sto‐ ries about corporate pres‐ sure to perform those bill‐ able services.
Former owner 'dis‐ traught' when franchise was revoked
In the case of former fran‐ chise owners like the lead plaintiff, Sivajanan Sivapalan, the claim alleges he and oth‐ ers had their franchises re‐ voked, or not renewed, for criticizing the allegedly un‐ ethical practices.
According to the court fil‐ ing, Shoppers informed Siva‐ palan that his franchise in Beamsville, Ont. had been terminated in January 2023. Shoppers did not provide Sivapalan any reasons for its decision.
"He was distraught when this happened. It was a very difficult time in his life," said Haji about his client.
"[Sivapalan] just wanted to seek justice and see re‐ dress for the pain and the kind of difficulties that many associates are going through."
WATCH | Pharmacy own‐ ers speak out:
For the proposed class of current franchise owners, the lawsuit alleges corporate practices, like medication re‐ view targets, interfere with their ability to use their pro‐ fessional judgment as phar‐ macists and to care for pa‐ tients safely and effectively.
"Shoppers Drug Mart has taken no action to address the clear risks posed by the Corporate Practices to pa‐ tient safety, the resulting breach of Franchisees' pro‐ fessional and ethical obliga‐ tions, and the consequent risk of regulatory scrutiny and sanction by the Ontario College of Pharmacists," reads the claim.
"Instead, Shoppers Drug Mart has more aggressively implemented the Corporate Practices to maximize prof‐ its."
A Shoppers Drug Mart spokesperson previously told CBC News the decision to de‐ liver a professional service, like a medication review, must be made by a pharma‐ cist using their judgment.
"Our role is to assist asso‐ ciate owners and their phar‐ macy teams to deliver these services. That includes work‐ ing with the associates on a yearly plan that is specific to the pharmacy's unique situa‐ tion and patient needs in the community," said the previ‐ ous statement from spokesperson Catherine Thomas.
In practice, the lawsuit al‐ leges the pharmacy chain is acting in a way that defeats the purpose of its franchise agreements because if a pharmacy owner faces sanc‐ tions from the provincial reg‐ ulator, as a result of corpo‐ rate practices, it would give Shoppers grounds to termi‐ nate its franchise agreement with that franchise owner.
As a result, the proposed class action is looking for the court to determine that Shoppers breached its fran‐ chise agreements with the class and to award damages for those alleged breaches.