Assessing Maple Leaf ’s culpability

Given the billions of dollars in damages potentially involved, the upcoming class-action showdown between two plaintiffs and the country’s bread makers and some of its leading grocery stores promises to be a dandy.

Much of the preliminary work for that lawsuit — which is taking place as the criminal investigation by the Competition Bureau over an alleged packaged bread price fixing conspiracy continues — has now been largely completed.

Two Ontario based firms — Strosberg Sasso Sutts LLP and Affleck Greene McMurtry LLP — have been selected to bring the case forward for a trial that will be held in Ontario’s Superior Court of Justice. In turn those two (which beat out about 10 other candidates, including some that were filed in the federal courts) will be assisted by a Quebec-based firm, Renno Vathilakis Avocats.

“We have put forward a national consortium to prosecute the case,” said Jay Strosberg, whose firm originally filed in Ontario.

In the past two weeks those two firms have filed a second fresh statement of claim that effectively combines the separate claims made by the two law firms. (A combined statement was required because Affleck Greene filed a class action in the federal court.)

And that 28-page document is noteworthy because a new plaintiff and two new defendants have been added. The two new defendants are Weston Bakeries Ltd., and Maple Leaf Foods. The latter, which had been named in the proposed federal class action, is also the only public company to be added: Weston Bakeries is a subsidiary of George Weston Ltd.

Prior to adding Maple Leaf Foods, Canada Bread, a company in which Maple Leaf had a stake of about 90 per cent and which was sold to Grupo Bimbo in early 2014 for $1.83 billion, was a defendant. (Canada Bread and Grupo Bimbo are also defendants in the fresh statement of claim.)

In an emailed statement, Debbie Simpson, chief financial officer at Maple Leaf Foods, said Thursday “we do not see a material financial risk from the action.” During the period covered by the Competition Bureau’s investigation, she said Canada Bread “was a separate public company with its own employees, an independent supply chain, operating management team and board of directors.”

That message is similar to what Maple Food said in early March when it released its 2017 annual report. Then it referred to being named as a defendant to the class-action lawsuit and what that could potentially entail. It indicated its belief that it was added as a defendant to the class action “as a result of the share ownership position it previously held in Canada Bread.”

But in the second fresh statement of claim, the allegation is made that “at all material times, Canada Bread participated in the conspiracy under the direction of Maple Leaf and Maple Leaf was aware of and participated in the conspiracy.”

The claim then alleges that, “until May 2014, Maple Leaf exercised complete domination and control over the affairs and activities of Canada Bread.”

None of those allegations have been proven in court.

In its annual report, Maple Leaf Foods said it believed “the resolution of these claims will not have a material effect on the Company based, in part, on the availability of insurance.”

It added two caveats: the final outcome with “respect to actions outstanding, pending or with respect to future claims cannot be predicted with certainty;” and that there could be an increase in its insurance premiums “even if any action is settled within insurance limits.”